India is one of the few countries where air passenger traffic has been rising year after year. More airports are being opened across the country. With a number of airlines in operation, competition is intense and the resulting fare war has, over the years, made flying an affordable option to many new air passengers. But, at the end of the day, none of the airlines seems to be making a profit. Perhaps only Indigo — the low-cost, no-frills, airline — has been able to keep its head above the waters. At the other end of the spectrum lie Air India and Kingfisher. For Air India, being a national carrier is both an asset and a liability. Kingfisher's malaise has more to do with extravagance and poor management. Today, the employees of both these airlines have resorted to strikes, protesting against the non-payment of salaries for months. The Prime Minister had himself to assure Air India pilots that their dues would be cleared over a period of time, and the Kingfisher Chairman, Vijay Mallya, had to meet unions and pilots to give them a fresh timetable for payment of salary arrears.
So what's wrong with the airlines, or even the aviation industry in such a growth centre as India? Why is the sector booming in China but not here? The airlines, speaking in one voice at least on this, insist that it is the lack of a positive, coherent aviation policy since the opening up of the skies that has led to this crisis. Though traffic is growing, the cost of operations has risen sharply. Aviation fuel accounts for nearly 50 per cent of the costs, and its price increase over the past two years has been substantial, eating into already low margins. Air fares have not risen correspondingly because of competition and the need to raise the load factor. Airport charges, particularly after the advent of privately developed greenfield airports, have also increased manifold. For Air India, the unwise and as yet incomplete merger of Indian Airlines and Air India has remained an albatross, while the now-on, now-off aircraft acquisition programme has led to a huge debt and interest burden. The Centre's decision to allow airlines to directly import fuel has been a welcome measure. But it is too little too late. The Civil Aviation Ministry must discuss all the issues affecting the economics of the industry threadbare and come up with a positive aviation policy to revive the sector without giving anybody a bailout or compromising on safety. The airlines, too, must set their houses in order and take employees into confidence, without leaving them in the lurch.
